BYD attaches a prominent role to Hungarian expertise and an innovative approach in its Hungarian activities.Continue reading
Concerns are growing in Budapest that Brussels will attempt to fix its competitiveness by eliminating real competition, while also creating a protective bubble around its failing EV industry at the expense of European taxpayers and consumers. According to the Financial Times, the European Commission has launched an investigation into whether Chinese subsidies for the BYD plant currently under construction in Hungary are “unfair”.
Although criteria between distinguishing fair and unfair subsidies for certain sections of industry are still haphazard at best, if Brussels finds irregularities with the Chinese investment in Hungary, which it almost certainly will, the consequences may be crippling for BYD and all its subsidiaries in Europe. As a result, the Chinese company may be forced to sell some of its assets, pay huge fines or be compelled to reduce its capacity below a threshold of competitiveness with ailing European auto-makers.
As Hungary Today reported earlier, the country’s largest industrial investment is currently underway in the southern Hungarian city of Szeged, with the project worth up to €5 billion, expected to create 8-10,000 jobs. Despite the magnitude of the project, János Bóka, Hungary’s minister for European Affairs, in his reply to FT’s question, informed that to date the Hungarian government has not been told about the investigation by the Commission. However, he stressed that he is “not surprised”, as in his view, the Commission is eager to investigate any foreign investment that arrives in Hungary with an exceptional zeal.
EU probes BYD plant in Hungary over unfair Chinese subsidies https://t.co/qa8LXF7YKR
— Financial Times (@FT) March 20, 2025
The complaint against BYD’s Hungarian venture has most likely originated from the European Parliament’s lobby groups connected with the German car industry that view the significant flow of Chinese investment into Hungarian ventures, such as EV battery manufacturing and the BYD investment is Szeged as a threat to the interests of German companies.
The European People’s Party, lead by Germany’s Manfred Weber, has been particularly active in scrutinizing the circumstances of Hungary’s rise as a regional power in EV technology.
Last year, for instance, two Dutch MEPs, Tom Berendsen and Jeroen Lenaers, have submitted a question towards the Commission claiming that “by supporting BYD, Hungary is directly weakening the competitive position of European companies, undermining the EU’s goals of strengthening our strategic autonomy.” They asked the Commission to “ensure that any measures resulting from the anti-subsidy investigation into electric vehicles from China cannot be circumvented by companies such as BYD by moving some or all of their production to the European Union.” Both Berendsen and Lenaers are members of Weber’s EPP.
Minister János Bóka is not surprised that the Commission is investigating Hungary without notifying Budapest. Photo: MTI/Purger Tamás
The new back-door Commission investigation appears to have all the hallmarks of crony corporatism wrapped in the cloak of legitimate concerns about European competitiveness. In reality, corporate lobby groups seek to mobilize their political contacts within the EU structures in order to tilt the legal and political environment to their favor, masking their own technological and logistical deficit.
The willingness of the Ursula von der Leyen lead Commission to comply with such requests cannot simply be explained by a drive to create a protective bubble around the German and wider European car industry, as counterproductive as that would be on its own. Claims of a political dimension to such investigations cannot be dismissed either. By hindering the rise of a mostly Chinese-driven EV battery and car industry, the Commission can throw a spanner in the works of their global economic rival, China, and make Hungary’s economic recovery harder for the European arch enemy, the government of Viktor Orbán. All in one sweep.
Last year as much as 40% of all Chinese investment to Europe ended up in Hungary. This is a remarkable achievement as far as the Hungarian government’s ability to attract foreign direct investment is concerned. This drive, as part of the Orbán government’s policy of Eastern Opening, is currently viewed as an essential means to compensate for the lost growth in industrial output that has been blamed on the lackluster performance of the German economy, one that the Hungarian economy is strongly connected to with an umbilical cord. While a punitive action stemming from the investigation could certainly jeopardize the success of the BYD plant in Hungary,
the real victims of EU protectionist measures will be the European tax-payers and consumers.
Eventually they are the ones who will continue to subsidize the ineffective European EV industry in the tune of tens of billions or euros, while also paying for its overpriced and potentially substandard products.
BYD is currently looking for a location for its third European plant. According to insiders, Germany remains their top pick for the mega-investment. Should Germany be chosen, it remains to be seen whether similar concerns will be raised towards the new plant as one “undermining the EU’s goals of strengthening our strategic autonomy.”
Featured Image: Hungary Today